Aditya Birla Asset Reconstruction Company (ARC), a joint venture between Aditya Birla Capital and Varde Partners, is winding down its India operations, marking the latest in a series of fund-backed ARCs exiting the country.
The move follows recent exits by Arcion Revitalization - a JV between Apollo Global and ICICI Bank - and Lone Star India, underscoring the increasing challenges in India's ARC sector as non-performing loans (NPLs) hit a 12-year low. This decline is largely credited to India's 2016 Insolvency and Bankruptcy Code (IBC) and the rise of the government-backed National Asset Reconstruction Company (NARCL).
Launched in 2018, Aditya Birla ARC will manage its existing portfolio but will no longer pursue new acquisitions of distressed assets, according to sources close to the matter. Several private ARCs face obstacles as banks increasingly prefer NARCL's terms, which offer a 15% cash component and 85% in government-backed security receipts (SRs), a structure that reduces risk for lenders. In contrast, private ARCs have to mostly bid with 100% cash.
